The $98 million modified deal provides $63 million in cash and $35 million in exit debt financing, as well as $4.5 million more in cost savings than the previous plan, according to the Honolulu Star-Bulletin. The previous reorganization plan was worth $100 million and provided $50 million in cash and up to $50 million in debt.
Aloha filed for bankruptcy on December 30, 2004, and its plans to exit bankruptcy within a year were thwarted by appeals from the Pension Benefit Guaranty Corporation (PBGC) last month, the Star-Bulletin said. Judge J. Michael Seabright of the US District Court for the District of Hawaii gave approval for Aloha Airlines to terminate its four underfunded pension plans (See NewsDash – December 19) after the airlines and its unions for pilots and flight attendants could not reach an agreement on their own about contract terminations (See Aloha Airlines and Unions Butt Heads ).
The Star-Bulletin reports that Aloha said in its motion that the plan must be approved expeditiously or“there is the distinct possibility that (Aloha) could run out of cash and would be forced to cease operating, rendering 3,500 residents of the state of Hawaii unemployed, and severely harming the state of Hawaii’s passenger and cargo operations.” It blamed the PBGC appeals and rising fuel prices for the need to restructure its plan.